How the IRS Scandal May Hurt Obamacare

The IRS will administer some of the most important provisions of the Affordable Care Act. (Scott Olson/Getty Images)

(The Root) -- So what if Senate Democrats foiled House Republicans' repeal of Obamacare -- for the 37th time? GOP lawmakers are drawing renewed hope of blocking the law's enactment from, of all things, the IRS scandal.

What does the Internal Revenue Service have to do with the Affordable Care Act? Everything.

Since the government will demand that every American have health coverage, it has to know who can and can't afford it. The IRS is the only agency with that information.

When President Obama's heath care law takes full effect in 2014, the IRS will administer some of the most important provisions, such as the mandated purchase of health insurance. To enforce that most vilified requirement, the agency will issue penalties to individuals who don't buy insurance and businesses that don't provide it for employees. As if enough Americans didn't already hate the IRS.

In addition, the IRS will administer the distribution of money through state exchanges to help low-income people afford insurance. The subsidies, which are the costliest piece of the law, are structured as tax credits.

The IRS has received $500 million from the Department of Health and Human Services to cover implementation. The president's 2014 proposed budget asks Congress to approve $1 billion more for implementation and enforcement. And the IRS wants extra money to hire hundreds of new employees for the effort.

For Obamacare, the timing of the controversy over the IRS's targeted scrutiny of conservative groups, as revealed in an inspector general's audit, couldn't have been worse.

Now Republican lawmakers can make a stronger case to deny the IRS funding, citing their concerns about expanding the authority of such a troubled agency.

"Obamacare empowers the agency that just violated the public's trust by secretly targeting conservative groups," Rep. Marlin Stutzman (R-Ind.) said last week after the Republican-led House voted to fully repeal the law, a move that the Democratic-controlled Senate has ignored. "Even by Washington's standards, that's unacceptable."

Republicans are expected to sharpen the message as congressional hearings dig deeper into the IRS's targeting activities this week. Ousted IRS Acting Commissioner Steven T. Miller and his predecessor testify before the Senate Judiciary Committee on Tuesday.

The Senate Judiciary Committee's ranking Republican, Charles Grassley of Iowa, told the Washington Examiner, "What's happened heightens fears about how the IRS will handle taxpayer information and wield its power when it enforces Obamacare starting next year."

The Examiner report, written by political correspondent and Fox News contributor Byron York, paints a picture of a more powerful, intrusive IRS under the Affordable Care Act:

" ... every American will have to prove to the IRS that he or she has ‘qualifying' health coverage ... The IRS will also decide who is, and who is not, eligible for Obamacare's subsidies. The law authorizes the IRS to share confidential taxpayer information with the Department of Health and Human Services for the purpose of determining those subsidies.

" ... the IRS will keep track of even the smallest changes in Americans' financial condition. Did you get a raise recently? You'll need to notify the IRS; it might affect your subsidy status. Have your hours been reduced at work? Notify the IRS. Change jobs? Same."

The IRS says that Ingram relinquished daily oversight of the tax-exemptions division at the end of 2010, six months after the targeting practice began. White House Senior Adviser Dan Pfeiffer has defended Ingram, saying, "No one has suggested that she did anything wrong yet."

Meanwhile, the White House, facing pressure about what Obama and top administration officials knew about the IRS conduct and when, on Monday said that it learned about the audit last month.

Press Secretary Jay Carney told reporters that several White House officials were briefed, but no one told Obama because the audit hadn't been finished.

Corey Dade, an award-winning journalist based in Washington, D.C., is a former national correspondent at NPR and political reporter at the Wall Street Journal, the Boston Globe and other news organizations. Follow him on Twitter.